GENEVA (Reuters) - Indonesia has launched a trade dispute against South Africa at the World Trade Organisation (WTO), challenging South Africa's imposition of duties against cheap imports of paper.

The case is interesting because the two nations are allies within the NAMA-11 group of developing countries in the industrial goods negotiations in the WTO's Doha round to open up world trade.

A letter from Indonesia's WTO ambassador Gusmardi Bustami, a copy of which was obtained by Reuters, said South Africa's continued imposition of anti-dumping duties on imports of Indonesian paper broke WTO rules.

"South Africa's failure to terminate the anti-dumping measure... is inconsistent with its obligation under... the Anti-Dumping Agreement," Bustami said in his letter to South Africa's WTO ambassador Glaudine Jacoba Mtshali.

This was because South Africa's own International Trade Administration Commission had concluded in 2005 that the expiry of anti-dumping measures, imposed in 1999, was unlikely to lead to continuing dumping by Indonesian exporters, he said.

Under WTO rules a country can impose duties on imports if they are sold for less than in the home market -- or "dumped" -- and this damages the importing country's industry.

But the duties must be lifted after five years at most unless a review of the measures determines that their removal would lead to a recurrence of dumping or injury.

The case will be followed closely by Indonesian paper makers such as Asia Pulp & Paper (APP), one of Asia's biggest paper producers, which defaulted on $14 billion of debt in 2001, and Raja Garuda Mas International (RGM), owned by one of Indonesia's richest men Sukanto Tanoto.

It is the second case brought by Indonesia at the WTO over anti-dumping duties on paper, after it successfully challenged measures imposed by South Korea.

Wed 14 May 2008, 10:04 GMT

By Jonathan Lynn

Source: africa.reuters.com